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IRS Proposes Permanently Extending Deadlines for Furnishing ACA Statements to Individuals

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· 5 minute read

Information Reporting of Health Insurance Coverage and Other Issues under §§ 5000A, 6055, and 6056, 26 CFR Parts 1 and 301, 86 Fed. Reg. __ (__ __, 2021)

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The IRS has released an advance copy of proposed regulations addressing information reporting requirements under the Affordable Care Act (ACA). The proposal would revise existing regulations regarding the requirement to furnish individuals with information about minimum essential coverage (on Form 1095-B) and the requirement that applicable large employers (ALEs) furnish individuals with information about coverage offered (on Form 1095-C). Here are highlights for employer-sponsored group health plans:

  • Deadline for Furnishing Statements to Individuals. The proposed regulations would permanently extend the deadline for furnishing a given year’s Forms 1095-B and 1095-C to individuals until 30 days after January 31 of the immediately following year (or the next business day, if the 30th day falls on a Saturday, Sunday, or legal holiday). The proposed extension generally aligns with extensions that have been granted for each year since the reporting requirements took effect (see our Checkpoint article on Notice 2020-76). It would replace both the 30-day extension that currently may be requested for good cause, and the IRS’s ability to provide blanket automatic extensions.
  • Alternative to Automatically Furnishing Certain Statements. Because the individual shared responsibility payment has been reduced to zero (see our Checkpoint article), the proposal offers an alternative to automatically furnishing statements in certain situations, similar to relief granted in Notice 2020-76. A reporting entity would be treated as having timely furnished Forms 1095-B to individuals so long as a “clear and conspicuous” notice with information about requesting the form is prominently posted on the reporting entity’s website, and a Form 1095-B is furnished within 30 days after an individual’s request is received. The notice must remain in the same location on the website until October 15 of the year following the calendar year to which the statement relates. Similar relief would be available to ALEs with respect to furnishing Forms 1095-C to non-full-time employees and non-employees enrolled in the ALE’s self-insured health plan. This relief would not apply to furnishing statements to an ALE’s full-time employees or reporting information to the IRS.
  • Elimination of Transitional Penalty Relief. The transitional good faith relief from penalties for reporting incorrect or incomplete information on returns or statements would not be available for reporting for tax year 2021 or subsequent years.
  • Applicability. Revisions in the proposal would apply for calendar years beginning after December 31, 2021, but reporting entities and ALEs may choose to apply the changes for calendar years beginning after December 31, 2020.

EBIA Comment: This guidance is somewhat surprising, given the IRS’s previous signal that there would be no more extensions. In any event, those responsible for furnishing statements to individuals will no doubt welcome the relief and appreciate the option to apply it for 2021—particularly since the IRS still has not issued final instructions for the 2021 Forms 1094/1095 (see our Checkpoint article on the draft forms). The proposal also includes a renewed request for comments on regulations proposed in 2016 regarding, among other things, reporting for catastrophic plans and the possible use of truncated TINs (see our Checkpoint article). For more information, watch for the 2021 update to EBIA’s Form 1094/1095 Workbook, including Sections IX (“Furnishing Employee Statements”) and X (“Filing With the IRS”). See also EBIA’s Health Care Reform manual at Sections XXVIII (“Shared Responsibility for Employers (Play or Pay Penalty Tax)”), XXXVI.C (“Information Reporting of Minimum Essential Coverage (Insurers and Employers That Self-Insure)”), and XXXVI.D (“Information Reporting of Employer-Sponsored Coverage (Applicable Large Employers)”). And don’t miss our upcoming webinar, “Form 1094/1095 Reporting for 2021” (live on 12/9/2021).

Contributing Editors: EBIA Staff.

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